Second Circuit Applies “Morrison” to Reject “Listing Theory”


On May 5, 2014, the U.S. Court of Appeals for the Second Circuit decided City of Pontiac v. UBS AG, affirming the dismissal of a securities fraud complaint against UBS and holding that the Supreme Court's decision in Morrison v. National Australia Bank precludes claims under U.S. securities laws based on transactions on foreign exchanges, even if the underlying securities are also cross-listed on a U.S. exchange. The Supreme Court held in Morrison that the private right of action under Section 10(b) of the Exchange Act does not apply extraterritorially. In the three years since, Morrison's practical application has been litigated extensively, with plaintiffs proposing various theories why Morrison permits federal securities claims based on transactions on foreign exchanges.

In City of Pontiac, the Second Circuit rejected claims brought by purchases on foreign exchanges, holding that only purchasers on U.S. exchanges (or in domestic over-the-counter transactions) can assert Section 10(b) claims. The decision confirms that foreign issuers do not subject themselves to liability under U.S. securities laws for transactions on a foreign exchange by virtue of cross-listing their securities on U.S. exchanges.

Originally published in New York Law Journal on May 23, 2014.

Please see full article below for more information.

LOADING PDF: If there are any problems, click here to download the file.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP | Attorney Advertising

Written by:


Morrison & Foerster LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.